While running your small business, you might not feel you have enough time for risk management. Yet, whether you're ready or not, risk is always present and can result in liability. Nevertheless, preventive measures and liability insurance may protect your business and your employees from costly lawsuits.

As you research the options, take the time to understand why your business might need insurance. A few questions to ask include the following:

  • What could go wrong?
  • What can we do to prevent this?
  • What should we do if it does happen?
  • How will we pay to fix it?

When you look at your operations and around your premises, you may notice that a number of hazards are present. Addressing these potential problems and eliminating as much danger as possible are part of an effective risk management plan. You can then follow this plan and present it to any prospective insurers. Risks and hazards may change over time, so keep current by periodically reviewing your plan.

Your next step is to choose a commercial insurance agent or broker. Those familiar with your business or industry may provide the best and most cost-effective insurance for your specific needs. Ask yourself which losses could bring your business to a halt; plan to insure against them. These losses could be due to:

  • Damages to your premises
  • Customer injuries or accidents
  • Defective products or services
  • Loss of production time due to an extended shutdown

Risk can range in scope. You may not be able to prevent a fire next door or a broken water main, but you could avoid damage to important items within your own premises by planning ahead. Likewise, to avert accidents, it could be useful to inspect for hazards such as slippery surfaces or poor lighting on a regular basis.

Prevention can save you a lot of time and money, but there is always the chance that an unforeseen event may occur. Arm yourself with the appropriate insurance for your small business to be better prepared for the unexpected.